What are ETFs & Mutual Funds? Index Funds Explained

In this video, we explore the investment tools of exchange traded funds (ETFs) and mutual funds. How are these types of funds different? How do they make use of indexes? You'll learn the difference between ETFs, Mutual Funds, and sector index funds on the stock market.

When people start investing, they often feel overwhelmed with new terms and financial products. The learning curve is steep. There's a lot of jargon to learn and technical knowledge to be mastered before we understand how to invest our money wisely.
Fortunately, here at Bull Academy, we specialize in creating videos to help you speed up the pace of your understanding. We want to help you acquire the knowledge you need to make sound decisions.

Three financial products that often confuse people at first are Indexes, Mutual Funds, and ETFs.
Some of your friends might swear by ETFs. And you know that Mutual Funds are classic financial products that have stood the test of time. Meanwhile, Warren Buffet, one of the wealthiest people in the world, swears by Indexes for the average person.

But what are these mysterious financial products? And what are the differences between them?
We're going to go through them one by one and explain everything you need to know.

Mutual Funds:

Mutual funds have been around since the 1920s. They were invented by a group of American economists who wanted to diversify investors' portfolios. Today, there are tens of thousands of mutual funds with trillions invested globally.

Mutual funds are typically managed by professionals who invest on behalf of their clients. Fund managers charge fees for the management of these funds. It's the price you pay for someone else's knowledge.

ETFs:

ETF stands for Exchange Traded Fund. An ETF is an investment in securities that track the performance of a particular index, commodity, or basket of stocks. These funds are designed to be flexible. Because ETFs track their underlying index or asset, rather than being managed by humans, if something goes wrong with that asset, it will be reflected in the value of the ETF.

These funds are passively managed and traded on exchanges like individual equities, which means you can buy them on retail investment apps like Robinhood. ETFs aren't managed but track indexes or economic sectors.

Indexes:

Indexing is a strategy for investing in stocks and bonds that seeks to match the market's return as a whole. Indexes themselves aren't financial products you put your money into. They're a way of tracking specific market segments, like renewable energy or infrastructure, or bonds.

Indexes are a measurement, a guide, that provides information about the economy. Index funds are funds built around those measurements, either mutual funds or ETFs.

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🧠 Here are more videos on the related knowledge:
- My $255,000 Growth Stock Portfolio: https://youtu.be/_xQaCmtOok0
- What are stocks? https://youtu.be/XkpBJ9OTfiE
- Robinhood Crash Course - Start Investing With $1: https://youtu.be/mNb_WK6FdnQ
- How Does Robinhood Make Money? https://www.youtube.com/watch?v=MDdm39t3PJo
- How to Protect Your Robinhood Account: https://www.youtube.com/watch?v=x15NSWPHPdM
- Yes, Stocks Go Down: https://www.youtube.com/watch?v=zAg_9hhjrDo
- What are warrants? https://youtu.be/GDZnMxiIWRA
- What are Special Purpose Acquisition Companies (SPAC)? https://youtu.be/QnFwygMDbOE
- Why are SPACs big deals for retail investors? https://youtu.be/gkmk6fmeAgs
- What are the dangers of SPAC warrants? https://youtu.be/L1Edod5AmGk
- Why I'm Investing $29,000 in $SBE Chargepoint: https://youtu.be/YrWR019uAZg
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Sources:
- https://medium.com/p/29910e2b6fd0

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🙏🏾 Thanks for watching http://BullAcademy.org with Lincoln W Daniel
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DISCLAIMER: This and all of my videos are for entertainment purposes only. My statements are my opinions and should not be accepted as financial advice.

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